Growth in pending home sales points to strong buyer demand
Since the start of the year, housing demand in Boise, Idaho, and the Treasure Valley has been surprisingly robust. Home prices fell across the country late last year, so they are down year over year.
But they haven’t shown continued declines since the new year. And while you may see headlines highlighting home prices going down very soon, these changes are behind us now and the data shows that prices aren’t yet declining further.
If you are considering selling a home or buying a new home this year what does this mean for you?
Low Inventory of New Homes For Sale Pushes us Towards a Seller’s Market
The Boise, Idaho market and the surrounding areas have been strong for several consecutive weeks. A big reason for this is due to low inventory of available homes which is one of the reasons we continue to stay in the Seller’s Market territory.
With very low availability of homes for sale it is not surprising that prices have recently resumed their climb. The median list price for Boise, ID area is now $626,949 and this is an increase over last month.
Where is Pricing Headed?
The price per square foot is increasing fairly consistently as of recent despite the fact that overall price trends haven’t shown a consistent upward push. This can imply that investment conditions are opportunistic.
Home prices can be climbing each week and still be lower than 2022 prices. Remember that most of the price declines happened late in 2022. As of right now, there doesn’t seem to be further downward pressure on prices, but the annual comparisons are going to keep getting worse for a few months because prices from 2022 were jumping so quickly. If economic conditions worsen, prices could start falling again like they did in the second half of 2022.
For the most extreme predictions of home price declines to be realized — folks who expect 20% plus home price declines — we’d have to have significant economic weakness hit us. It certainly seems possible, but the data right now does not show it yet.
We expect price reductions to start ticking up next week. Once April is almost upon us, the homes listed in Q1 that didn’t get offers yet will start taking price cuts. Price reductions have probably hit their low point here at just over 30%. The question is, do they rise on the curve from last year? Again, if recession and job losses hit hard, you can expect to see it in the price reduction data. If we manage a soft economic landing, this curve stays flatter. A flatter curve here is an indication that home prices are not declining further.
In February, mortgage rates were around 6% and people were buying more homes than we expected. In recent weeks, the rates jumped over 7% and that has definitely slowed things down. Rates declined and then declined again this month in response to the bank failures. While lower rates are obviously better for home buyers, it’s hard to imagine how bank failures won’t add to the fears that make buyers more reluctant.
When the February sales data hits the headlines here at the end of March, remember that the homes that sold in February were on the market and taking price cuts in November and December. We’d expect that for home sales prices to decline from here, there would need to be much weaker demand right now. If the economy drives weaker demand, we’ll see price cuts ticking up more rapidly each week.
It’s the economy and financial markets that we need to keep our eyes on. If you need to know what’s happening in our market then book a free consultation with our team. We’ll help you interpret this crazy market so you can make the best informed decisions. This is a critical time to be properly informed about the market.